Key states hold out on health

With his leadership authority on the line, Prime Minister
Kevin Rudd
was under pressure last night to raise his financial offer to the states as they pushed for new concessions before agreeing to sign up to the federal government’s health reforms.

A meeting of state and territory leaders on Sunday night broke up with major differences between them remaining, and Victoria, NSW and Western Australia holding out against the federal government’s proposals.

South Australian Premier
Mike Rann
– the strongest supporter of the Rudd plans – warned his colleagues that they would be “crazy" to reject the commonwealth offer.

The strongest Labor critic of the plans, Victorian Premier
John Brumby
, declined to respond but NSW Premier
Kristina Keneally
said that a deal would not be possible unless the federal government was prepared to make concessions on “the 10 per cent" of issues on which there was still disagreement.

The last-minute brinkmanship has further raised the stakes in the battle over health reforms by raising concerns about possible damaging fallout for the federal government’s wider economic reform agenda.

As officials were warning that relationships between the key players responsible for implementing the Rudd government’s sweeping COAG reforms were in danger of fracturing if the health negotiations failed, the state and territory leaders were meeting with the Prime Minister at the Lodge to try to prevent a blow-up at today’s leaders’ meeting.

Earlier, the state and territory leaders met for almost two hours to try to find common ground so that a possible deal might be done today. For the last 30 minutes of the meeting they excluded their officials and advisers to try to find common political ground.

But Mr Rann said it was clear at the end of the meeting that Victoria, Western Australia and NSW “have a different position to the rest of us".

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He warned that the stand the leaders were taking risked killing “a once in a generation opportunity" to lock in federal funding for hospitals.

It is understood that Mr Rann attempted to broker a compromise proposal with the reluctant states but the talks failed to make any progress.

The difficult meeting between the state leaders came after earlier, slightly concessionary statements from all sides had raised hopes that an agreement could still be reached at today’s talks.

Insiders said there still could be scope for the federal government to raise its offer of $3 billion in new spending on hospitals and health services in return for the states accepting the basic elements of the federal reform proposals.

The Prime Minister said yesterday that more money had to be conditional on more reform of the health system.

“Let me just be very clear about that: what we need for the future is more reform and more money in order to deliver a better hospital system for the future, not simply more blank cheques. That, in its essence, is the Australian government’s position," Mr Rudd said.

Speaking early yesterday, Mr Brumby said he believed some progress was being made in pre-COAG discussions but he insisted that any final outcome to the negotiations would have to involve a “pooled funding" arrangement where federal and state money were lumped together rather than a third of state GST funds being withheld by the commonwealth for hospitals and health services.

As the pro-Rudd state leaders intensified pressure on Mr Brumby, Queensland Premier
Anna Bligh
warned that if the health reform negotiations collapsed, the Queensland government would be prepared to campaign with the federal government for a yes vote in the constitutional referendum.

Mr Rudd has threatened to call a referendum to confirm the federal government’s power to seize full control of the national health system.

Federal Health Minister
Nicola Roxon
strongly reaffirmed yesterday that the federal government was determined to carry out the threat to hold a referendum despite some commentary suggesting the commonwealth already had the constitutional power.

Ms Roxon said the government wanted to make absolutely sure of its constitutional authority if it decided to go ahead with a national takeover.

Meanwhile, before today’s summit, Treasurer
Wayne Swan
raised the financial stakes by suggesting that the states were engaged in a money grab at a time when their own finances were healthier than had been previously realised.

Mr Swan released new Treasury forecasts that showed goods and services tax (GST) revenue collections were expected to be $13 billion higher by 2013-14 than forecast a few months ago.

This meant the states would be $2 billion to $3 billion a year better off than had been expected at the time of the Mid-Year Economic and Fiscal Outlook.

Officials said later that over the period to mid-2014, Victoria would be about $4 billion better off and NSW around $3 billion.

Mr Swan said the improved GST revenue projections would put the states in a better position than the commonwealth because similar revenue gains were not expected for corporate and personal tax collections – the major sources of federal revenue.

Mr Rudd yesterday appealed to the state and territory leaders to take what he said was an historic opportunity for long-needed reforms to the health system.

“After years of waiting, tomorrow presents the premiers and the chief ministers with a great opportunity to take a huge step forward in the delivery of better health and hospital services for all Australians, and I think that’s what the Australian people are saying they want," Mr Rudd said.

“But to deliver better health and hospital services we need first to reform the system to get rid of duplication and waste, and then secondly grow the system by greater investment in beds, doctors and nurses.

“Now, some of the premiers – [Opposition Leader Tony] Mr Abbott, too – seem to be saying the current system is fine, just provide another blank cheque. I’m not prepared to do that."

But in his remarks before the meeting of state leaders, Mr Brumby accused the federal government of having a $1.4 billion “black hole" in its calculations on how much the states would receive from the commonwealth.

He said the states could not accept an offer that would make them financially worse off.